Veterans' Home Loan Mortgage Indemnity Act of 1988

Veterans' Home Loan Mortgage Indemnity Act of 1988 - Establishes a Veterans Administration Mortgage Indemnity Fund. Provides that the Indemnity Fund shall be available to the Administrator of Veterans Affairs for all operations with respect to guaranteed or insured VA housing loans for which fees are collected, other than loans for property which has been disposed of by veterans to a purchaser who will assume liability for such a loan. Provides that the following sums shall be credited to the Indemnity Fund: (1) all fees collected from such housing loans, other than loans for property which has been disposed of by a veteran to a purchaser who will assume liability for such loan; (2) .25 percent of the original amount of all loans for which a fee is collected for the first three fiscal years beginning with the fiscal year in which such fee is collected; (3) all collections of principal and interest and the proceeds from property held or disposed of with respect to such loans; and (4) all income from investments of the Indemnity Fund that are required to be made by the Secretary of the Treasury in obligations of the United States.

Increases the fee for a VA housing loan to 1.25 percent of the total loan amount. Provides that the following fees shall be collected: (1) one percent of the total loan amount with respect to housing loans obtained which are in default; and (2) .75 percent of the total loan amount with respect to loans for purchase or construction for which a down payment of at least five percent of the total purchase price or construction costs has been made. Provides for the waiver of such fees for veterans who are receiving compensation and whose disability is rated at at least 30 percent. Provides that the provision prohibiting fee collection with respect to all loans closed after September 30, 1989, shall apply after such date only to loans which are in default or loans for property which has been disposed of to another purchaser. Provides that any veteran who pays a fee for such loans, other than loans which are in default or loans for property which has been disposed of, shall have no liability to the Administrator with respect to such loan for any loss resulting from a default of the veteran.

Revises provisions regarding the Loan Guaranty Revolving Fund (the Fund) to: (1) provide that it shall be available to the Administrator for all housing operations except those carried out by the Indemnity Fund; (2) limit the deposit of housing loan fees in such Fund, other than fees for loans for property which has been disposed of, to fees collected before the effective date of this Act; and (3) limit the deposit of principal and interest and the proceeds from property held or disposed of with respect to housing loans to loans guaranteed of before the effective date of this Act.

Revises a provision authorizing the Administrator to sell notes evidencing loans which are in default to permit such sale only if the amount received at the time of the sale is at least 90 percent of the unpaid balance of such loan.

Revises a provision regarding basic entitlement to housing loans to authorize the Administrator, in computing the amount of guaranty entitlement available to a veteran, to exclude the amount of entitlement used for any loan which has been repaid in full.

Prohibits the Administrator, in waiving indebtedness following the default of a veteran on a housing loan, to base such waiver on the balancing of fault or on whether such veteran may be able to repay the indebtedness.

Expresses the sense of the Congress that the VA should: (1) refrain from disposing of foreclosed real property through auctions; and (2) concentrate on disposing of such properties through conventional selling methods or on leasing such properties with incentives. Requires the Administrator to report to the Congress on the feasibility of implementing the congressional recommendations.